The initial public offering (IPO) of Laxmi Organic Industries, a specialty chemicals manufacturer, opened today with a price band of Rs 129-130 per share. The issue, which will close on March 17, aims to raise Rs 600 crore through the IPO.

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The total issue size has been reduced to Rs 600 crore from Rs 800 crore earlier as the company has already raised up to Rs 200 crore in its pre-IPO placement. The IPO comprises of a fresh issue of Rs 300 crore and an offer for sale of Rs 300 crore from promoter group Yellowstone Trust.

The company garnered Rs 180 crore from 15 anchor investors ahead of its initial share-sale at Rs 130 per share. The anchor investors are Nomura India Equity Fund, Abu Dhabi Investment Authority, Goldman Sachs, Kuber India (Plutus), Theleme India Master Fund, Malabar India Fund, Ashoka India Opportunities Fund, India Acorn Fund, SBI Mutual Fund, ICICI Prudential Mutual Fund Kotak Mutual Fund, SBI Life Insurance Co Ltd, HDFC Life Insurance Co Ltd and DSP Mutual Fund.

Here's all you need to know about the issue:

Opening Date: March 15, 2021

Closing Date: March 17, 2021

Price Band: The price band for the issue has been set at Rs 129-130 per share.

About the firm: Established in 1992, the firm is the largest manufacturer of ethyl acetate in India. It has a diverse product portfolio and a market share of approximately 30 percent of the Indian ethyl acetate market and approximately 55 percent of the diketene derivatives market. The products find application in varied high-growth industries including pharmaceuticals, agrochemicals, dyes & pigments, inks & coatings, paints, printing & packaging, flavours & fragrances, adhesives etc. It has two manufacturing units in Mahad, Maharashtra.

Size of the issue: The Rs 600-crore issue comprises a fresh issue of Rs 300 crore and an offer for sale of Rs 300 crore by Yellow Stone Trust, the promoter selling shareholder.

The company, after consultation with the merchant bankers, raised Rs 200 crore by issuing 1.55 crore shares under the pre-IPO placement issue. The fresh issue size decreased from Rs 500 crore to Rs 300 crore and thus the total offer size from Rs 800 crore to Rs 600 crore.

Minimum Bid: Investors can bid for a minimum of 115 equity shares and in multiples of 115 thereafter, resulting in a minimum investment of Rs 14,950 at a higher price band.

Objective: The net proceeds from the issue will be utilised for setting up a manufacturing facility for fluorospecialty chemicals, requirements of working capital, purchase of plant and machinery, and prepayment or repayment of all or a portion of outstanding debt.

Book Runners: Axis Capital and DAM Capital Advisors are the book-running lead managers to the issue.

Financials: Revenue growth over FY18-20 was at 5 percent CAGR, while net profits declined to Rs 44.5 crore in FY20 due to 15 percent lower production, hit by floods. Customs and electricity duty refund restricted the fall in PAT. In H1FY21, EBIDTA was at Rs 86.3 crore versus Rs 1400 crore in FY20.

Clients: The company caters to major names like Alembic Pharmac, Dr Reddy's, Hetero Labs, Laurus Labs, Neuland Labs, Suven Pharma, Granules India, UPL, and Sudarshan Chemicals.

Outlook: Prabhudas Lilladher, in a note said, "We recommend Subscribe on Laxmi Organic’s IPO with a long term perspective given its striking growth plans led by 1) scheduled new acquisitions, 2) expansion of core business, 3) entry in high margin fluoro chemistry segments and 4) long term contracts for specialty intermediates. The company is the largest manufacturer of ethyl acetate with a 30 percent market share. It is the sole manufacturer of diketene derivatives in India with a 55 percent market share. While growth has been muted in FY20 due to floods and low production along with weak spreads, we expect it to improve as new capacities and business segments come on stream in FY22/23E.